Foreign TP with a SS#

[ILLMAS]

TP obtained a SS# when he came to the US on a student Visa, 20+ years later he entered the US on business visa.  During one of the visits he bought  an investment property and the attorney advised the TP to put the property in an L LC.  TP would like to be a foreign shareholder/member and would  report the profit or loss on his home country tax return, can this be done?  I have not encountered a situation like this before, but him having a SS#, wouldn't it be proper for the LLC issue him the K-1, and he would report it on a 1040NR?

 

Thanks

[SaraEA]

An LLC is a disregarded entity for tax purposes, so there will be no K-1.  The income earned in the US will go on the NR but income taxes will be paid to the US, depending on the treaty.  His home country should give him credit for the taxes paid here, again depending on the treaty.

[ILLMAS]

Thanks, but he if decides to make an election to be treated as Sub-S corporation, then we would need to use his SS# to be shareholder/member correct?

[Lee B]

With his citizenship status, can he qualify to be legitimate S Corp shareholder ?

[ILLMAS]

Thanks for your question, made me look more into it and found this:

 

S Corporations

S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level.

To qualify for S corporation status, the corporation must meet the following requirements:

• Be a domestic corporation
• Have only allowable shareholders
  • including individuals, certain trusts, and estates and
  • may not include partnerships, corporations or non-resident alien shareholders
• Have no more than 100 shareholders
• Have only one class of stock
• Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).